To The Moon

LVMH, the world's leading luxury conglomerate, is showing no signs of slowing down, reporting a stellar first quarter performance in 2023.

The company's revenue surged by 17%, driven largely by increased demand from Asian markets. Notably, the relaxation of Covid restrictions in China has led to a significant boost in luxury goods consumption, benefiting LVMH in particular.

With majority of its revenue coming from Asia, LVMH has been able to capitalize on this trend and maintain its position as the world's largest luxury stock by market cap.

LVMH's Q1 2023 results demonstrated a strong recovery in the Asian market, with sales in Asia (excluding Japan) growing by 14%. This is a notable improvement from the mere 8% growth seen in the same period last year, and suggests that the region is rebounding from the Covid-19 pandemic.

Sales in Japan grew the most, surging by an impressive 34% compared to the previous year. This strong performance in Japan, coupled with the recovery in Asia, is a positive sign for LVMH's future growth prospects.

Europe continued to show strong growth, with sales up by an impressive 24% in Q1 2023. However, the US market saw a deceleration in growth, with sales increasing by just 8%.

The Selective Retailing segment, which includes stores such as Sephora and DFS, demonstrated impressive growth in Q1 2023, with a remarkable 28% increase in revenue compared to the previous year. This strong performance was fueled by the easing of Covid-19 restrictions in China, which led to a surge in travel and increased revenue for DFS.

Sephora also reported strong sales across various regions, including North America, Europe, and the Middle East. As the second-largest revenue contributor to LVMH's overall revenue, the Selective Retailing segment is a key driver of the company's growth.

The Fashion & Leather Goods segment remains the largest revenue contributor for LVMH, accounting for almost half of the company's total revenue in Q1 2023. The segment demonstrated strong growth, with sales increasing by 18% compared to the same period last year. This highlights the continued demand for LVMH's iconic brands and products, including Louis Vuitton, Christian Dior, and Fendi.

LVMH has achieved 13% annual revenue growth rate over the past five years. Looking ahead, the company is well-positioned to maintain this growth rate, particularly with the renewed consumer demand from China.

Investors have also taken notice of LVMH's impressive financial performance, as evidenced by the company's strong stock performance. Year-to-date, LVMH's share price has rallied by an impressive 21%, highlighting the market's confidence in the company's growth prospects.

Looking back over the past five years, LVMH's stock return has been nothing short of remarkable. The company has achieved a compounded annual return of 24%, underscoring its ability to consistently deliver value to its shareholders.

LVMH's market capitalization that places it among the largest companies in the world. In fact, LVMH is currently ranked as the 14th largest company globally, ahead of well-known names such as Walmart and JPMorgan Chase.

Bernard Arnault, the Chairman and CEO of LVMH, is a major driving force behind the company's success. With a 48% ownership stake in LVMH, Arnault's personal wealth is closely tied to the company's financial performance.

In fact, Arnault's efforts have paid off handsomely, as he recently topped the Forbes Billionaires annual ranking for the first time in 2023. This achievement came after 17 years of steadily climbing up the ranks, having first entered the top 10 richest list in 2006.

Arnault's success can be attributed to his strategic approach to acquisitions, which has helped LVMH build a diverse portfolio of strong luxury brands. This approach required patience, but the payoff has been significant, with LVMH now recognized as the world's largest luxury goods company.

The future looks bright for LVMH and its Chairman and CEO, Bernard Arnault. With the normalization of post-Covid consumer behavior, rising affluence in China and the Middle East, and a widening wealth gap, LVMH is well-positioned to capitalize on these favorable trends and it is possible that Arnault will remain near the top of the Forbes Billionaires ranking for years to come.

The share price is overvalued at present based on the discounted cash flow value of $834, while its current share price on the OTC markets in the US (OTC:LVMH.F) is at $950.

Just like with branded handbags, it may be prudent to wait for a sale before buying the stock.

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